Cryptocurrency related provisions
were published via a circular from Banxico (Bank of Mexico), the central bank
of Mexico. The circular was published in
the Official Gazette of the Federation on Friday. These provisions were provided in detail in a
way to clarify the provisions available for the Financial Technology
Institutions in Mexico.

Tomas Alvarez, CEO of Volabit, a Cryptocurrency Exchange stated, “This Essentially stipulated that they wouldn’t authorize any cryptocurrency to be offered by regulated financial companies.”

Alvarez further added, “A year
ago a law to regulate Fintech companies was passed by the Mexican Congress.
This law stipulates that services that hold custody of users’ fiat money or
cryptocurrencies (most brokers and exchange business models require this) have
to apply for a license issued by the Mexican equivalent of the SEC (CNBV).”

“The deadline was due to expire
this month so last Friday Bank of Mexico published their secondary laws which
essentially stipulated that they wouldn’t authorize any cryptocurrency to be
offered by regulated financial companies.”

This is considered to be a Catch-22
situation because according to these rules any financial service that is not
regulated is illegal. With the Fintech law in place, it is not possible to
operate an exchange in Mexico.

Officially, this law is currently
live and in effect ever since it was published. This applies only to Fintech companies;
however, there are no Fintech companies in existence so far as the procedure
for becoming a regulated Fintech company is not yet determined by Mexico’s SEC.

There is a special waiver for
Fintech companies that are operating in Mexico until the registration process
is in place, therefore providing companies with six months breathing period to
register themselves for a license.

Bin Ren, CEO of Elwood recently
stated “An ETF gives a highly liquid and regulated way to gain exposure. This
is the right point to start.’’ However, he opined that a lack of meaningful
regulation in place had prevented several institutions from trading the crypto.

Alan Howard, the British
Billionaire, will be investing a hedge fund that he owns into blockchain and
digital assets. The Elwood Asset
Management will be working closely to bring in institutional investors into the
cryptocurrency space.

Previously, Meaningful exposure
to digital assets was to buy the Bitcoin; however, several of them were
reluctant to buy the Bitcoin for a good reason, which is due to low
transparency and meaningful regulation. With significant regulations in place,
digital assets and Fintech companies will become an appealing selling point for
investors.

About The Author

A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies.